At Heritage, we believe that education is an important part of the estate planning process. On this blog we will be sharing some information, articles, and opinions that you may find helpful along your way.

Estate Planning Attorney

02/25/2016

Your first choice of an executor may not reside in your state of residence but they can be appointed to the position. However, it is important to know the potential problems.

Your first choice as the executor of your estate may not live close by or even within your state of residence – but, if you are comfortable with them, they are someone you trust and someone with strong financial knowledge and experience it is still possible to designate that person as your executor. It is important, however, to realize there can be problems.

Executors are often required to make personal appearances at court hearings. It can be burdensome and expensive for an out-of-state executor to make the travel arrangements. Logistically, paper correspondence may also take longer.

According to the article, some states have additional requirements when the executor is a non-resident. For example, the state of Indiana requires out-of-state executors to post a bond and appoint someone who is a state resident as a registered agent for service of process. Other states have similar requirements.

On the plus side, appointing an out-of-state executor allows you to designate the best person for the job. Many of the negatives of doing so can be mitigated if the executor hires a local estate attorney to assist with the administration.

Consider contacting an estate planning attorney to guide you in the selection of filling the important position of executor.

01/18/2016

Some popular Social Security loopholes for married couples have been closed but some strategies remain.

Recently Congress closed a couple of Social Security loopholes included in a larger piece of legislation focused on avoiding default of debts. The loopholes, known as "file and suspend" and "restricted applications," are complex.

What did they do? They basically allowed married couples to accrue a little bit more money out of the system by carefully filing the appropriate paperwork in a specific order at specific times. The majority of Americans did not take advantage of the loopholes either for practical reasons or because they did not know about them.

That these loopholes have been closed does not mean Americans can no longer plan to maximize their potential Social Security income.

01/06/2016

The possibility of acquiring a long-term care insurance policy can bring confusion, a waste of time and a headache.

The cost of nursing home care can be extreme and more and more people are looking at possible solutions to paying those costs. An industry arose to answer those concerns and insurers began offering policies to cover those costs. While it sounds like it might be a simple solution to a difficult problem, it appears the process isn't so simple.

The key thing to understand is that 90% of the companies that offered long-term care policies in the past no longer do so. These companies discovered it is very difficult for insurers to make money on the policies.

Those companies still in the market offer a confusing array of policies with benefits and costs that are not always easily understood. It can be migraine-inducing for people to figure out what they are getting if they purchase a policy.

It can also be a complete waste of time for a couple of reasons.

First, 40% of people who apply for the policies are turned down for health reasons. Second, the policies do not offer life coverage. They are short term policies and if your need for coverage exceeds the policy term then the money spent on premiums is wasted.

If you are looking into long-term care insurance it might be wise to seek independent advice such as from an estate planning attorney or elder law attorney to be sure the policy is of value to you and what benefits you would actually receive.

01/05/2016

Most estate planning and elder law attorneys can be counted on to represent their clients honestly and professionally but it is wise to choose a representative carefully.

One of Florida's well-respected elder law attorneys, who wrote columns about elder law and estate planning, is no longer an attorney and not very respected. On Dec. 10, 2015, the Supreme Court of Florida permanently disbarred William Edy. The list of things Edy was charged with doing improperly is long.

He was charged with skimming money from a client's settlement checks, charging for unnecessary work that was never completed, charging a deceased person's credit card and not maintaining a trust account to hold client funds. These are all serious ethical problems that resulted in charges that Edy financially abused his elderly clients.

As horrendous as these charges may be it is important to note that he does not represent the overwhelming majority of estate planning and elder law attorneys who do not financially abuse their clients.

When hiring an attorney make certain you can trust the attorney. If something does not seem right, then it is often a good idea to ask a friend or family member if it seems right to them. You can also ask another attorney in the field for a second opinion.

The attorney you hire will most likely treat you fairly but it is wise to choose carefully. At Heritage, our attorneys pride themselves on their commitment to ethics and the wellbeing of their clients. For more information on our attorneys and professionals, visit our website.

12/25/2015

A wealthy man has passed away in China leaving his estate worth more than a billion dollars to charity resulting in his sons challenging the will.

Yu Pengnian, a 93-year-old real estate executive in Hong Kong, has died and left an estate estimated at more than US$1.55 billion. Pengnian continued his life-long support to charity by leaving the bulk of his estate to a charitable foundation.

All of his assets, except for the contents of two safes given to his grandsons, were directed by will to go to a charitable foundation. His two sons were left nothing in the will. Those sons have filed will caveats with the probate court overseeing the will, which is essentially filing the same thing as a notice of intent to challenge the will.

It is possible that we will see many similar will contests all over the world in the coming decades as a recent trend has seen the extremely wealthy pledge to leave at least half of their estates to charitable causes. With billions of dollars at stake, it should come as no surprise that the families of these wealthy philanthropists might not always be pleased with giving so much away to charity.

By giving all of his money to charity and leaving nothing for his sons, Yu Pengnian might have made an avoidable mistake. It might have been better to leave something of value to his sons and include a no-contest clause in the will.

Even if there is a no-contest clause in Pengnian's will, which is unknown, it would not have stopped the sons from contesting the will as they receive nothing from it now. On the other hand, if they succeed in challenging the validity of the will, then they will each receive half of the assets of the estate.

Speaking with an estate planning attorney could help reduce the possibility of such challenges. At Heritage, our attorneys are constantly working to help families avoid problems such as these. To learn more, call our office at (724)841-0004.

12/23/2015

The limitations of incentive trusts should be considered carefully as people attempt to encourage their heirs to succeed.

There is often considerable concern about leaving large sums of money to heirs and people will often set up plans intended to help the recipient achieve success. Rather than risking the heir just living off the money people want to see their heirs go to good schools, get into professions and have families.

One popular response to this is to create incentive trusts. In these trusts beneficiaries receive distributions when they behave in a certain way or accomplish something, such as getting a college degree or getting a job.

The Trusts Are Too Inflexible – Sometimes things in the trust that seem like a good incentive generally do not work well for individual beneficiaries. For example, a trust might distribute money to a beneficiary upon receiving a college degree, but what if the beneficiary enters a profession that does not require a degree, such as the military, being a professional athlete, or being the next Bill Gates and founding a successful tech startup. If the trust language is too rigid, the trustee will not be able to distribute assets to these beneficiaries even if the person who created the trust would have wanted to.

The Trusts Are Too Vague – On the other end of the spectrum some incentive trusts are too vague. For example a trust that distributes money to a beneficiary when the beneficiary enters a respectable profession or gets a good job might require the trustee to make difficult judgment calls about a good job or respectable profession.

Work closely with an estate planning attorney to create a trust that helps an heir achieve goals yet remains flexible. Trusts work in many different ways and can be very complex. To learn more about how they work and creating your own trust, attend a free Heritage workshop.

If you choose to sell the collection before you pass away, then you are likely to face steep investment income taxes if the items in the collection are sold for more than you paid for them. In some places this can be as high as 45% or more when federal, state and municipality taxes are taken together.

Alternatively, if you decide to pass the collection to your heirs, then the value of the items in the collection will increase the overall assets in your estate, which itself could have estate tax implications.

It is also possible that your heirs might have no interest in keeping the collection.

Another possibility is to donate or lease the collection to a museum. If done properly, you can receive tax benefits for doing that. However, for many collections it can be difficult to find a museum that is interested in displaying the collections.

Speaking with an estate planning attorney is always a sound plan, especially as you decide how you want to handle a valuable collection.

12/16/2015

An estate plan is often used to support important causes after a loved one has passed away and a woman in Italy found the answer by bequeathing her home to stray cats.

Fiorella Scannabissi of Bologna, Italy supplied many of the city's stray cats a home while she was alive and wanted to continue to support the cause after she passed away.

As The Local reports in "Bologna's Cats Inherit Plush Apartment," she loved the stray cats of the city so much that she left her top-floor, seven-room apartment to them. No, this is not a case where the neighbors might consider going to court to stop a messy situation.

The cats will not be living in the home worth US$243,944.

Instead, Scannabissi left instructions for her home to be sold by the local council. The proceeds from the sale will be donated to the city's cattery, which takes care of the local strays.

What this illustrates is the flexibility of estate plans.

This is just one example of what can be done in an estate plan to make sure that what you support in life continues to receive support after you pass away. For Scannabissi it just happened to be stray cats.

By meeting with an experienced estate planning attorney your support for causes may be carried on through an estate plan which is often not complicated.

Many of our clients leave pets in their estate plan. Whether it's plans to care for a well-loved dog or giving homes to hundreds of cats, we can help you find a way to achieve your estate planning goals. Visit our website to learn more about becoming a client.

Some wealthy families continue to amass wealth generation after generation. The article points out how this occurs: the families that continue to thrive leave an "intellectual inheritance" for heirs.

Consequently, they educate their heirs about the family's legacy and values. They have conversations with their heirs about how the wealth was generated and why it is so important that it be maintained through continued hard work.

Think about this when you are creating your own estate plan.

While an expert estate plan prepared by a professional goes a long way, it is also important for future generations to have intellectual inheritance as well as wealth. For more information on ensuring that your estate gets left in the right hands, attend one of our free workshops.

10/21/2015

One can only hope that this decision by an appellate court in Michigan does not reflect a slippery slope of decisions. At its essence, this ruling says that it is possible for an attorney to be unethical and profit from the will that he created.

Attorneys are held to certain ethical standards, one of which is very clear: an attorney should not create a will for a non-relative that includes a large gift that is to be given to that attorney. Common sense tells us that the attorney is a trusted professional, and the trust placed in the attorney by an incompetent or unsophisticated client could be abused if the attorney did not follow this basic tenant of legal practice.

Despite this well-known rule, an attorney in Michigan drafted a will for his long-time friend that gave $14 million to the attorney and his children. This was nearly the entire estate. The deceased's family sued to have the will declared invalid. The trial court ruled that since the attorney acted unethically in drafting the will, the will itself was against public policy and invalid.

The attorney appealed and won.

The appellate court decided that the will was not automatically invalid. Instead, since the attorney acted unethically, it created a presumption that he exerted undue influence. If the attorney can prove that he did not exert undue influence, then the will remains valid. The Detroit Free Press reported this story in "Court: Lawyer's $14M inheritance unethical, not invalid."

Ordinarily the person claiming there was undue influence in creating a will has the burden to prove the claim, which is often difficult. It remains to be seen how difficult it will be for the attorney to prove that he did not exert undue influence. This case will be watched closely by those in the estate planning industry as well as legal ethics experts. To learn more about Heritage and our knowledgable, ethical attorneys, visit our website.